Wednesday’s New York Times said that Washington is offering daily “prayers to the swamp gods” for what I longingly think of as “regular order.”  However, then the President of the United States congratulates the Russian head of state for eviscerating the U.S. diplomatic capacity in a rather hostile power, it’s all too clear that the swamp gods are otherwise occupied.  What does this power’s absence mean for U.S. financial regulation in coming months?

First to regulation.  Confirmations will come still more slowly, meaning that the construct of U.S. financial regulation will remain largely on what I would call the “modified Obama” track for the next six months or so.  Does that mean time out for advocacy?  Of course not, as we have noted, the Treasury report lays out a clear, coherent, and controversial course of a regulatory rewrite under the Trump Administration.  Where current law allows it – and current law allows a lot – change will be slow, but sure.

The legislative outlook for the fall is less clear.  When Republicans can’t even agree to overturn a rule – mandatory arbitration – from an agency they loath for an industry they love, the swamp gods’ vacation is keenly felt.  In the fall, Majority Leader McConnell will surely separate his agenda from the Administration’s and start to move legislation most Republicans and key interest groups support, with tax reform first on the list.  Parliamentary changes could facilitate this, making bipartisanship less essential. 

However, bipartisanship is still likely to resume its role in Senate deliberations, especially in lower-level matters like housing-finance and regulatory reform.  Sen. Crapo’s determination to move bills that garner as much support from Democrats as possible for relatively modest initiatives could well prosper in this new environment.  He has chosen GSE reform as his top priority and this could well emerge as a potent package with strong chances of passage if the chaotic fall agenda permits time for anything other than the budget chaos and foreign policy crises already upon us.

Will it?  Every day that the swamp gods are about their own pursuits, this town gets still less productive and times grow still more dangerous.